The US central bank began the most aggressive interest rate campaign in its history in March 2022. Despite these significant interest rate increases, the American economy managed to stay afloat and, against all expectations, there was no recession yet. As a result, Bitcoin and stocks are doing fantastic right now.
But according to one very reliable indicator, we may still have to worry about a recession in 2024.
Still a recession in America?
The recession signal we are currently receiving is the result of a so-called inversion of the yield curve.
This is referred to as the interest rate on short-term US government bonds higher than on the long-term variants. The graph below concerns the interest rate on government bonds with a term of 1 month versus those with a term of 10 years.
Normally, as an investor, you get a higher interest rate the longer you lend your money. The explanation for this is logical. Over a period of 10 years you run more risk on various points than with a 1-month loan.
As you can see each resulted conversion of the yield curve since 1964 in a recession for the US economy.
However, that recession only came when the conversion changed again to the natural situation, in which the interest rate on long-term government bonds rose again above that of short-term government bonds.
That moment seems to be approaching and that is why recession alarm bells are cautiously ringing again.
What does this mean for the Bitcoin price?
A recession would be a negative development for the Bitcoin price in the short term. Normally a recession means that people lose their jobs, companies go bankrupt and the economy gets into trouble.
Logically, for this reason there is less capital available for investments and you often see that people (have to) sell their investments to protect themselves against economic disaster.
In that respect, it is to be hoped that there will be no recession.
Even more so because almost everyone is currently counting on a “soft landing” of the American economy. We speak of a soft landing if inflation returns to the desired level of 2.0 percent and the central bank succeeds without causing a recession.
Because everyone now expects that soft landing, that positive feeling is also reflected in the Bitcoin price. If we do have a surprising recession, we will undoubtedly see this reflected in the Bitcoin price.
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Source: https://newsbit.nl/alsnog-een-recessie-in-amerika-wat-betekent-dat-voor-bitcoin/
